With syndication for healthcare giant HCA's credit well underway, and the smaller deal for Freescale Semiconductor launching today, buysiders seem to be split on how to handle them. A week after the launch of the biggest term loan in market history, investors are having a hard time squeezing it in. "Healthcare buckets are reasonably full and the numbers that came out recently on HCA were far from stellar," said one portfolio manager. "My healthcare guy can't make it work. The numbers don't work and I think that's the general feeling," he said.
"If [buysiders] are going to do it, they are going to put in for very small allocations and play it in the secondary," he suggested. Another investor who started by playing in the asset-based revolver, said he heard similar rumors about the deal. "It may be better to wait for the secondary," he said.
But so far the deal's $8.5 billion term loan "B" seems to be filling up at a steady pace. One investor mentioned the deal had about $5 billion in the book last Wednesday. "It's not the best strategy to wait for the secondary," he said.
In the wake of HCA comes Freescale Semiconductor's $3.5 billion term loan, which could steal some thunder. Another investor had heard that the Freescale credit could possibly be covenant-lite. "It would be a big deal if it was," he said. "I would expect push back on that heavily," said the second portfolio manager, in regards to the credit being covenant-lite. "And that's not necessarily a good thing."
The deal is set to include a six-year, $750 million revolver and a seven-year, $3.5 billion term loan facility. Led by Citigroup, Credit Suisse, JPMorgan, Lehman Brothers and UBS the $4.25 billion senior secured credit facility will back the $17.6 billion buyout of Freescale by a consortium of investors including The Blackstone Group, The Carlyle Group, Permira Funds and Texas Pacific Group.